Microsoft Beats Expectations While Pushing Cloud Strategy

By John Heerdink LinkedIn

Redmond, Washington-based American multinational technology company Microsoft (MSFT) develops, manufactures, licenses, supports and sells computer software, consumer electronics, personal computers, and related services.

Recently, Microsoft Corp reported its Q2 sales and profit earnings that beat analyst expectations & promised a steady growth into the next year, which in turn drove shares forward making it the most valuable public company with more than $1 trillion as market capitalization. The shares soared as much as 3.1% to $140.67.

The gains were mainly driven by its cloud computing service, Azure web services, and internet-based Office programs. The software maker plans to increase its operating expenses by 11% to 12% for the fiscal year and plans to spend the into building data centers, as per reports. The

Company’s go-forward strategy is currently set to be centered around cloud services, as more and more customers are moving storage and computing responsibility to remote servers additionally engaging clients to sign up to Azure and its subscription-based package of Office 365 cloud software and other security programs proved beneficial and boosted the net income for the quarter at $13.2 billion, or $1.71 a share.

“Microsoft is brimming with confidence in cloud growth on the heels of Azure and Office 365 success,”.“The Street will be loudly applauding this forecast.” stated Dan Ives, an analyst at Wedbush Securities.

Sales for Office 365 software rose 31%, while Azure cloud sales rose 64% as compared to 73% growth in the previous quarter, which became a cause of concern among investors, nevertheless, the high-profit margin for cloud services looks promising to widen margins for the new fiscal year as reported in a conference call by Chief Financial Officer Amy Hood .

Revenue from the company’s business unit including Office suites like Word, Excel, and PowerPoint, saw an increase of 14% in the quarter to $11 billion beating analysts’ estimate of $10.7 billion. Sales from cloud services comprising of Azure and server software soared 19% to $11.4 billion accounting for biggest division by revenue for the software maker. Sales for the PC market performed well and rose overall for 9% and 18% for the pricier professional editions.

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